V. NEW TECHNOLOGIES AND FINANCE - United Nations

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V. NEW TECHNOLOGIES AND FINANCE

Government policies contribute importantly to setting the incentive and regulatory framework to induce a shift towards sustainable patterns of consumption and production. Often, behavioral responses of consum-ers or managerial changes of producers can achieve significant results. Nevertheless, to make the major changes needed in coming decades will require more. It will require development of new environmentally sound technologies as well as a much faster scaling up of both current and yet-to-be developed technologies. Technology development and scale-up in turn require significant financing to make the necessary investments.

New technologies

The most significant technological advance of the past generation has been the very rapid growth and increasing penetration of Information and Communication Technologies (ICT) in both developed and develop-ing countries. While manufacturing ICT equipment produces sizeable new material flows and using ICT generates significant energy demand (still largely supplied by fossil fuels), ICT has at the same time made possible significant improvements in resource and energy efficiency and reductions in waste. By one estimate (see figure), the carbon mitigation opportunities made possible by ICT applications outweigh the ICT sector’s own carbon footprint by a factor of five.

2002 40.0ICT 0.5

51.9ICT 1.4

30*

Five times ICT’s direct footprint

2020BAU

Abatements

2020 with abatements

Emissions

ICT footprint

Selected ICT-enabled abatements

Other abatements*

ICT Impact: The global footprint andthe enabling effect (GtCO2)

Source: The Climate Group, 2008.


ICT — and in particular mobile telephony — represents a case of technol-ogy leapfrogging which has brought affordable communications to rural areas of the developing world, leaping over fixed-line phone technology. Sub-Saharan Africa’s and Southern Asia’s negligible fixed-line coverage but significant mobile cellular coverage (see figure) illustrates this well.

0

20

40

60

80

100

120

2007 Fixed telephone linesper 100 population

2007 Mobile cellular subscriptions

per 100 population

2007Internet users

per 100 population

Pen

etra

tio

n ra

tes

per

100

inha

bit

ants

Regions

World Developed region SSA LAC Eastern Asia Southern Asia

ICT penetration rates per 100 inhabitants, 2007

Source: ITU, 2010.

Source: Pyramid Research Data, WCIS, 2008.

Mobile penetration (% of population), 2008

37

48

66

66

83

72

0 10 20 30 40 50 60 70 80 90

Africa

Asia Pacific

Latin America

Eastern Europe

Western Europe

North America

Mobile phones (increasingly wifi capable) have extended a range of serv-ices to the rural poor, such as e-banking (including microfinance and remittance management), on-the-spot agricultural information and advice (e.g. weather, pests, prices) and remote access to medical information and advice, including veterinary medicine.

As the world economy begins to recover from one of the worst economic crises in decades, information and communication

technologies (ICT) are bound to play an increasingly prominent role as a key

enabler of renewed and sustainable growth, given that it has become an

essential element of the infrastructure underpinning competitive economies.

— WEF, The Global Information Technology Report 2009–2010.


Patent filings and awards show an acceleration in recent years of inno-vation in climate change mitigation technologies, with renewable energy and energy efficiency in buildings and lighting roughly on a par in numbers of patents issued.

Ecological footprints of new and emerging technologies are still uncer-tain. Industrial biotechnology has a number of potential applications for enhancing sustainability. For instance, enzymes have been developed that reduce the heat of water needed to wash clothes; others are being devel-oped to convert cellulosic biomass from agricultural waste or energy crops into fermentable sugars for producing bio-ethanol; still others to reduce nitrogen emissions from animal farming.

0

200

400

600

800

1,000

1,200

1,400

1,600

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Tota

l nr

of

pat

ents

Renewable energy

Electric and hybrid vehicles

Energy efficiency in building and lightning

Total

Climate change mitigation patents, world total

Source: OECD, 2009.

Energy savings from nanotechnologies are expected to be significant. For example, they will enable: solar cells that are produced at reduced costs and provide higher efficiency; light-weight transportation components that improve fuel economy in automobiles and trucks; more efficient lighting (i.e., LEDs) at homes and offices; and better performing catalysts/ separations/materials technologies that enhance the energy efficiency of manufacturing9.

On the other hand, their environmental and health impacts are still imper-fectly understood. Potential occupational and public exposure to manu-factured nanoparticles will increase dramatically in the near future due to the ability of nanomaterial to improve the quality and performance of many common consumer products as well as the development of medical ther-apies and tests which use manufactured nanoparticles10. Yet, there is still a paucity of information on nanoparticle toxicology and exposure assess-ments and they are also very resource intensive.

Finance

Finance is needed both to develop new technologies for more sustainable consumption and production, and to build the infrastructure and plant and equipment to realize more sustainable consumption and production pat-terns and make more sustainable products.

Of particular importance in the future will be the development of a low-carbon energy infrastructure and provision of low-carbon energy and transportation services in developing countries to support strong eco-nomic growth and social development.

The following figures provide a snapshot of trends in new investment in renewable energy technologies in particular, but also in other technologies which can help reduce carbon footprints while improving energy access.


While renewable energy remains a small share of global capacity in the power sector, its share of added capacity in that sector has been growing steeply during the past decade, reaching one-quarter of power capacity additions as of 2008.

Developing countries’ share of total global financial investment in renewa-bles increased to 31% in 2008, from 26% in 2007. China led investment in Asia, with $15.6 billion of new investment, mostly in new wind projects, and some biomass plants. Investment in India grew 12% to $3.7billion in 2008, of which asset finance represented $3.2 billion, up 36%. Brazil accounted for almost all renewable energy investment in Latin America in 2008, receiv-ing $10.8 billion, up 7% from 200711.

Socially and environmentally screened investments have become more popular over the past decade, as evident from data on “responsible invest-ments (RI)”. The RI penetration is expected to reach between 15 to 20 per-cent of total Assets Under Management (AUM) or around $26.5 trillion by 2015. If the RI market enters a proliferation phase the global RI growth rate could rise to 30 percent per year. Europe — especially Switzerland and the UK — will drive much of this growth. With its growth rate of 28 percent per annum, the European RI market is expected to reach $14.2 trillion, overtak-ing the US RI market. Currently the largest RI market, the US, is expected to grow to $9.5 trillion by 2015.

Financial new investment, by technology, 2008

$ billion and % growth on 2007

Wind

Solar

Biofuels

Biomass and waste-to-energy

Marine and small-hydro

Geothermal

Efficiency

Other low carbon tech/services

1%

49%

-9%

525%

-5%

149%

-33%

537%

Growth

51.8

33.5

16.9

7.9

3.2

2.2

1.8

1.5

0 10 20 30 40 50 60

Source: Bloomberg New Energy Finance, 2009.

Source: Bloomberg New Energy Finance, 2009.

2.9 2.9 3.1 3.2 3.6 3.9 4.4 3.9 4 4.3 4.5 5 5.4 6.2

5 6 6

10

15 16

23

8

10 10

19 19

25

0

5

10

15

20

25

30

2002 2003 2004 2005 2006 2007 2008

Renewable power as a % of global power generation

Renewable power as a % of globalpower capacity

Renewable power generation increase as a % of global power generation increase

Renewable power capacity addition as a % of global power capacity addition

Renewable power generation and capacity as a proportion of global power, 2002-2008, % share


Socially responsible investing has been depressed, along with other invest-ments, by the ongoing global recession. Clean energy investment funds have also suffered the effects of the ongoing uncertainty in the global climate regime following the inconclusive Copenhagen climate change negotiations. On the other hand, government spending on “green” investments has received a significant boost during the recession, with substantial portions of stimulus packages in many countries earmarked for environmentally sound investments.

Socially and environmentally screened investments (Socially responsi-ble investment, or SRI) and assets managed according to environmen-tal, social and governance (ESG) criteria represent an increasing share of assets under management, reaching 10% in the US, 7% in Europe and 2% in Asia in 2007. Growth is expected to continue in Europe and the US and to explode in Asia to 150% to bring SRI penetration to 10% by 2015. Total assets under management that are socially and environmentally screened

7% 10%

2%

20 %

15%

10%

0

5

10

15

20

25

30

35

40

Europe 14.2 United States 9.5 Asia 2.8

RI A

sset

s U

nder

Man

agem

ent

(AU

M)

(% g

row

th)

Total RI AUM (2015 $ trillion)

2007 2015

28% 17% >150%

Responsible investments (RI) market growth, 2007-2015

Source: Robeco, Booz & Company, 2008.

Gre

en s

tim

ulus

(US$

bn)

and

its

shar

e in

th

e to

tal fi

scal

sti

mul

us p

acka

ges

, 200

9 216.4 $bn

94.1 $bn

36.3 $bn 36 $bn 22.8 $bn

13.8 $bn 9.5 $bn 9.3 $bn 7.1 $bn 3.8 $bn 0

50

100

150

200

250

China US S. Korea Japan EU Germany Saudi Arabia

Aus France UK

33.4%

12.0%

95.3%

5.6% 58.8%

13.2% 7.5% 21.2% 21.2%

10.9%

Green stimulus (US$ bn) and its share in the total fiscal stimulus packages in 2009

are expected to reach $26.5 trillion by 2015. The UN Principles for Respon-sible Investment have attracted 640 signatories with combined assets under management of $14 trillion. The trend is toward ESG that, instead of or in addition to screening out undesirable corporate citizens, selects leading companies in their sectors to drive continuous improvement.

The recent increase in renewable energy investment and green stimulus spending has not been limited to the developed countries. Emerging economies play an increasingly prominent role in these technologies and sectors. China registered the largest absolute amount of green stimulus spending, while Republic Korea registered the largest green share of its stimulus. In the case of renewable energy, Brazil is a world leader in pro-duction of biofuels, while China and India both have sizeable installed capacity of wind and solar PV.

Source: Barbier, 2009.


bill

ion

liter

s

0

5

10

15

20

25

30

35

40

United States Brazil EU Rest of theworld

Main Biofuels Producers in 2008

0

50

100

150

200

250

300

World

Develo

ping

Countri

es

EU-27

China

United

Sta

tes

Germ

any

Spain

India

Japan

Gig

awat

ts

Solar PV (grid)

Geothermal

Biomass

Wind

Small hydro

Renewable power capacities, by source

Source: See Sources at the end for details.

Source: See Sources at the end for details.

Source: European Photovoltaic Industry Association, 2008.

Source: Global Wind Energy Council, 2008.

Wind energy capacity, Total power installed 2008 (gigawatts)

Photovoltaic energy, Global market 2008 (megawatts)

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V. NEW TECHNOLOGIES AND FINANCE - United Nations